In the context of consumer markets, which of the following is true of consumers?
a. They often follow the practice of reciprocity.
b. They tend to buy in very large quantities.
c. They approach purchasing rather formally.
d. They normally buy products rather than lease them.
ANSWER: d
Consumers normally buy products rather than lease them. But businesses commonly lease expensive equipment such as computers, construction equipment, and automobiles.
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The tradeoff in the traditional tradeoff theory of optimal capital structure is between:
a. agency costs of debt and information asymmetry costs of debt. b. the tax benefit of debt and the expected costs of future financial distress. c. the tax benefit of debt and agency costs of debt.
Shared activities and risk reduction are usually difficult-to-duplicate bases for corporate diversification, but tax advantages and employee compensation are usually relatively easy to duplicate
Indicate whether the statement is true or false